On June 24, former Oklahoma Rep. Ernest Istook, a Republican, challenged the wisdom of an executive order President Trump signed that same day. In a piece written before the order was published, Istook argued that an order giving patients complete information about the prices they’ll pay for healthcare services would serve no beneficial purpose in terms of its transparency and possibly “increase prices in other ways,” especially through increased compliance costs.
Never mind that the prices we pay for healthcare in the United States are already twice what’s paid in any other developed nation; instead, just consider the absurd idea that requiring providers to make prices known will lead to such a massive bureaucratic reporting hassle as to cancel out price compeition. Or that that even higher prices will be the result as the costs of reporting and publishing prices are passed along to consumers.
At Trump’s briefing on the executive order, highly respected economist Larry Van Horn from Vanderbilt University explained that price transparency should drive prices down dramatically. Istook’s claim to the contrary defies the common sense of everyday Americans and economists alike.
We have 250 years of experience in the U.S. with a system of free markets that give us some of the highest quality, lowest cost goods and services in the world. The system depends on the ability of buyers to know the price being charged by sellers — before a purchase is made.
For too many years, the American healthcare industry has thrived because of what Secretary of Health and Human Services Alex Azar refers to as “our bizarre three-party payment system.” In our bizarre system, two parties (hospitals and insurance companies) supposedly negotiate a price that the third party (patients) are responsible for, yet we are not privy to the negotiation or the price until after the fact. The result is a broken system — one that Istook seems keen to perpetuate.
Trump took a bold step to right a very big wrong that has been plaguing the middle class for decades by vowing to put American healthcare on a path toward becoming a robust, free-market, consumer-driven system. That’s something every American should applaud, including Istook.
Tom Coburn, a physician and fellow of the Manhattan Institute, served in the U.S. Senate from 2005 to 2015. David Silverstein is the CEO of the Lean Methods Group and the founder of Broken Healthcare, a nonprofit patient advocacy group dedicated to achieved price transparency in healthcare.
